Yesterday’s rally was part of a relief rally, driven by easing uncertainty, and part Trump rally. Call it what you will, but it was a thunderous move across all exchanges. Previously, the market had been hovering near its highs, barely holding on by a fingernail with extremely light volume—not moving down simply due to a lack of selling. Today, that all changed in a BIG way. Volume surged on all exchanges, which is precisely what you want to see when a market sets new highs. The small-cap Russell 2000 reached its highest level in three years, while larger exchanges also saw massive trading volumes and set new highs.
The small-cap action is encouraging, but we need to keep an eye on longer-term rates, especially the 10-year Treasury. (See chart below.)
The chart shows that the 10-year Treasury yield has been moving higher. When interest rates rise, Treasury prices fall. In an ideal stock market, most would prefer to see these yields moving lower, especially as we approach the final phase of an anticipated soft landing. Rising yields could pose challenges for the small-cap market, so it’s essential to keep an eye on this. For now, it doesn’t seem to be affecting the market, but that can change quickly if you’re not paying attention. This can be a game changer. REMEMBER I SAID THAT.
Where do you put your money now?
I anticipate a big move in the banking sector. With a Trump victory, institutions are hopeful of major deregulation in this sector. I believe this will be an institutional favorite sector. I have my favorite banking stock pic in my stock pic section. It is also yielding 5%. A bonus for everyone. My stock pics will be posted shortly.
Upstart
My number one stock pic had a great 2 days. It is up about 6 dollars in the last 2 days. Earnings come out tomorrow after the close. I expect them to beat earnings expectations and raise forward guidance. If that happens and market conditions are good on Friday, it would not surprise me to see a powerful move higher. On a technical trading scale, there is very little resistance between 55 and 70 dollars, and there is resistance in the 70’s but not a lot. Once it closes over 80 dollars, it would not take long for this stock to reach 100 dollars again. That is my opinion as a chart reader. It would take ideal market conditions and a lot of luck for this to happen in the short term. But always remember, you never get hurt taking a profit. The saying goes, pigs get fat and hogs get slaughtered. We always want to be the fattest pigs that remain alive in the pen. Not the slaughtered hogs that are taken to market.